CoinDesk
Author: Climber
In the midst of the cryptocurrency market’s downturn and the battle between meme coins and VC coins, there are still projects quietly working and waiting for the bull market to come. Babylon is a typical representative, aiming to lead a new cycle of the Bitcoin ecosystem narrative.
Bitcoin purists believe that Bitcoin is like gold and should be held. In the world of PoS (Proof of Stake), holding coins means making money. The basic principle is that stakers lock their personal tokens to become validators of the PoS system, and the protocol maintains the integrity of the staking process through reward and penalty mechanisms.
Babylon’s Bitcoin staking protocol can transform native Bitcoin into stakeable assets for any PoS system, unlocking the $1.5 trillion value of 21 million BTC. This vision has also led Babylon to secure $96 million in funding for three consecutive years. The former founder of Polygon even stated that compared to projects like Eigenlayer, Babylon is severely underrated.
In light of this, CoinDesk interviewed Trudy Liuu, the partnership lead of Babylon, to understand the value of Babylon and the technical principles that allow them to ensure the stability and security of Bitcoin asset staking.
1. Congratulations on Babylon’s recent completion of a $70 million funding round. Could you briefly introduce Babylon and the composition of the project team?
Trudy: Babylon is a secure sharing protocol that brings unparalleled security of Bitcoin into the decentralized world. The latest Bitcoin staking protocol allows Bitcoin holders to stake their Bitcoin in a trustless and self-custodial manner to provide cryptographic security for PoS systems. Babylon was founded by David Tse, a member of the National Academy of Engineering in the United States and a renowned electrical engineering expert and professor at Stanford University.
Dr. Fisher Yu, a co-founder, is an expert in blockchain security and cryptography, with over 15 co-authored patents and more than 20 high-impact academic papers.
Additionally, we have a team of developers, researchers, and industry experts from different countries.
2. What factors prompted your team to create and develop this project? What are the challenges the project faces in its development?
Trudy: Babylon is creating the first native Bitcoin staking protocol to bring the security and decentralization of Bitcoin into PoS blockchains and Rollups. This solves two major challenges – it allows Bitcoin holders to earn rewards without trust for the first time and enables PoS networks to incentivize and diversify chain security in a cost-effective manner.
3. Babylon is positioned as a Bitcoin staking protocol. How does the project operate? What are its operational mechanisms and principles?
Trudy: We have successfully used existing Bitcoin scripts and advanced cryptographic primitives to simulate Bitcoin staking and slashing. In other words, we have managed to build a minimalist Bitcoin staking contract residing on the Bitcoin chain, similar to how smart contracts reside on other blockchains.
You only need to lock your Bitcoin in a self-custodial manner according to our protocol. The locked Bitcoin becomes stakeable and slashable, while also enjoying all the popular staking rewards in the PoS world.
4. For BTC stakers, the security of staked assets is of utmost concern. How do you ensure the safety of user assets? How is the staking yield designed?
Trudy: The Babylon Bitcoin staking protocol allows Bitcoin holders to lock their Bitcoin in a self-custodial manner without the need for a third-party bridge, and it is permissionless.
In addition, we have the Coinspect team, a top security company in the Bitcoin security field, especially in Bitcoin script, and the Zellic team, who are participating in building the next version of the Babylon code.
5. The project whitepaper mentions that Babylon follows a remote staking approach and overcomes the lack of smart contracts on the Bitcoin chain by combining encryption technology, consensus protocols, and the Bitcoin script language. How do you achieve this process?
Trudy: Unlike most other blockchains, the Bitcoin chain sacrifices programmability for stability. You cannot simply write code (such as smart contracts) to guide the Bitcoin chain on how to validate evidence of malicious behavior and slash the relevant Bitcoin stakeholders. In layman’s terms, the Bitcoin chain does not know how to act as the enforcer of diplomatic affairs.
Babylon aims to establish a trustless and non-custodial Bitcoin staking protocol. To do this, people must find a way (through code) to teach the Bitcoin chain how to handle staking and slashing correctly (using the Bitcoin script language).
6. Can you provide an update on the current progress of the project? What are some impressive data performances to date, such as TVL, ecosystem projects, and interaction data?
Trudy: The Babylon ecosystem currently involves 87 partner projects in various tracks, including BTC L2s, DeFi, Liquid (Re)staking, Wallet & Custodians, Cosmos Ecosystem, and Rollup Infrastructure.
7. In the current Bitcoin ecosystem, there are many projects in various tracks, especially in the Bitcoin L2 track. Where do you think Babylon’s advantages lie? What is the connection between Babylon and Bitcoin L2s?
Trudy: Babylon is a secure sharing protocol that brings unparalleled security of Bitcoin into the decentralized world. The latest Bitcoin staking protocol allows Bitcoin holders to stake their Bitcoin in a trustless and self-custodial manner to provide cryptographic security for PoS systems. Babylon can provide Bitcoin security for Bitcoin L2s.